Tax Deduction Credit
April 16th, 2009
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Question: Can the interest you pay on a credit card, if you are a small business owner be used as a tax deduction?
I am a small business owner and was told buy another that the interest that I have paid from a credit card, used only for that business can be used as a tax deduction. My tax person has told me know that you never can use the interest from a credit card to be used as a tax deduction. Does anyone know the correct answer?
Answer: the instructions for schedule c clearly ALLOW the deduction of any interest paid such as in your example as a business expense on schedule c.(to be deducted against business income) the IRS calls credit card financing “revolving credit” (just like the credit reporting agencies) and specifically addresses this issue in the instructions for schedule c (as well as in the general pub 17) i would be real cautious of a tax preparer that tried to dissuade you from deducting this as a bona fide interest expense.the issue of used exclusively for business expense does not apply in this particular case. i can say that the other answerer’s misconception on this issue stems from their confusion with the rules for credit card interest expense deduction for student loans and not a self employed person’s use of a credit card in the normal course of their business (think entrepreneurship and the fact that most business start ups are begun on none or very little resources) cash
the next answer if i read it correctly, it states that either way it is an expense….. and if that is correct? then i must ask where is the distinction or relevance to the question at hand,
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Tags: credit, deduction, irs, tax, tax deduction credit card interest, taxes